To be able to own a house in Singapore is one of the toughest hurdles to surmount. The country ranks among the top 10 countries in the world to own a house. Albeit kind courtesy government policies and regulations put in place, most Singaporeans can afford a home of their own. Anyone who intends to own a house in Singapore needs to know about government regulations, qualifications to own a house, preferred location, price range, etc. In this publication, we have explained the various steps in the form of a guide to assist persons who wish to own a house in Singapore.
What type of properties can a Singaporean buy?
The type of properties a Singaporean can buy is broadly grouped into three categories.
The first categories are flats issued and managed by the Housing Development Board. These flats come in various forms and with numerous eligibility requirements and restrictions. For instance, residents of HDB homes cannot keep certain types of pets, with the cat being a prominent example. Per the HDB’s directive, cats are a group of pets that are ‘difficult to contain within the flat’. HDB flats are typically 3-room flats and bigger and 2-room Flexi flats. These flats are offered under several sales schemes such as Open Booking, Build-To-Order and Sale of Balance Flats. In a nutshell, persons in Singapore who intend to own an apartment in the HDB flats must meet a number of criteria regarding income, age and property ownership. More to the point, Singaporeans applying to own HDB properties are strictly prohibited from owning other properties in Singapore. Apart from that, there is also a restriction on the number of HDBs an individual can own. A provision disallows Singaporeans from combining HDB flats ownership with a design, build and sell scheme (DBSS) or executive condominium (EC) flats.
Executive condominiums are next on the list (alternatively known as sandwich flats). These flats are designed for Singaporean citizens who can afford neither HDB flats nor private condominiums due to income eligibility restrictions and affordability. Executive condominiums possess a broad range of recreational facilities and are generally cheaper options than their private counterparts are. However, executive condominiums transitioned from HDB ownership to private ownership in the eleventh year. Prior to their transition, ownership of an EC makes one eligible for a number of grants, such as the Family and Half-Housing grants.
Private properties in Singapore are of three broad types: private condominiums, apartments and houses/bungalows. Alternatively, a Singaporean may opt for private properties. However, this class of properties is generally designed for people with means and members of the high-income earning group.
What type of properties can foreigners buy in Singapore?
Singapore’s Residential Property Act of 1976 stipulates what type of properties foreigners are allowed to buy or own in Singapore. The Act forbids non-citizens from owning homes that belonged to deceased citizens and former citizens of Singapore. Furthermore, this prohibition extends to the purchase of new Housing Development Board housing units. However, individuals who hold permanent residence status in Singapore are allowed to own, upon the satisfaction of certain requirements, the following categories of properties: resold HDB housing units, executive condominiums, private condominiums and landed properties of selected types and in specific locations (subject to approval from the Singaporean Land Authority agency). Individuals who hold no permanent residence status in Singapore can buy private executive condominiums aged in excess of ten years. Beyond private executive condominiums, other permissible property types include apartments and landed properties of selected types and in specific locations. Housing units and estate properties situated on the Singaporean main island can be purchased only with the approval of the Singaporean Land Authority.
Can singles buy HDB flats?
Housing Development Board flats are available for singles under two schemes, the Singles Singapore Citizen Scheme and Joint Singles Scheme. Under both schemes, single Singaporeans can buy or own new or resold HDB flats. However, individuals applying through these schemes are mandated to meet a minimum age requirement of 35 along with satisfying income requirements typically between S$7,0000 to S$14,000. In addition, these purchases can be made with the aid of various Central Provident Fund (CPF) Housing Grant facilities like Enhanced Housing Grant (EHG), Singles Grant and Proximity Housing Grant.
How much does it cost to buy a house in Singapore?
Houses in Singapore vary according to category. Normally, the price of an HDB flat in Singapore is around $532,768. This is less expensive compared to other properties in Singapore due to subsidies by the Singaporean government. Private condominiums, which are not recipients of Singaporean government subsidies, normally cost between S$1,025,386 to S$3,101,784. 4-bedroom condominiums are typically more expensive, costing up to 74% of the average price for private condominiums. Other property types (such as terraced and cluster houses, corner terraces, semi-detached and bungalows) may fall within the average price range of S$3,168,077 and S$9,566,667.
That aside, it is worth taking into account that the cost of a house in Singapore is influenced by many factors. Some of these factors relate to demand and supply, such as the number of housing units and properties supplied and demanded as well as the matter of location. It bears mentioning that house costs may be influenced by legal costs, insurance costs, renovation costs, mortgage costs and property taxes, and maintenance costs. Legal costs are incurred from the process of preparing documentation for property ownership and typically include the following: stamp duty for a lease agreement, conveyance and caveat registration fees.
How much can I borrow to finance my home?
In Singapore, the mortgage finance limit is determined with the use of the Loan-To-Value (LTV) ratio. This ratio is calculated using the value or price of the property intended for purchase: In other words, LTV ratios correspond with house price and value. Mortgage facilities advanced by the Housing Development Board have an LTV ratio of 85%. The 85% ratio implies that a person can pay up to 15% and borrow 85% of the price or value of an HDB flat. Mortgage facilities advanced by Singaporean banks have a maximum LTV ratio of 75%. Home financing arrangements done under bank-issued credit facilities entail a down payment of a maximum of 25% in cash or alternative channels. However, the LTV ratio available through HDB and Singaporean banks may be influenced by factors such as the lease duration of the property, outstanding mortgages, property location and condition, age and credit score.
What is an HDB Concessionary Loan?
An Housing Development Board (HDB) Concessionary Loan is a credit facility to help eligible applicants fund their purchase of an HDB flat or housing unit. However, this credit facility is accessible only to individuals who meet various requirements pertaining to nationality, household status, income, and property ownership. Individuals are further required to hold an HDB Loan Eligibility Letter, which can be applied for an online sequel to the satisfaction of eligibility requirements and possession of income documents for assessment as specified by the Housing Development Board. This credit facility is reserved for Singaporean citizens.
Can I use all my CPF Savings to buy an HDB flat?
As per the provisions of the Housing Development Board, the use of Central Provident Fund (CPF) Ordinary Account savings can be used to fund an HDB flat purchase in instalments or in full. However, usage is restricted to caps based on HDB flat value and price as well duration of lease.
Can private property owners buy HDB flats?
Private property owners are excluded from owning and buying HDB flats. However, standard eligibility requirements for Housing Development Board flat purchase permit private property owners to purchase resold HDB flats on the condition that they sell that property within a maximum window of 6 months from the date of flat purchase. Build-To-Order and Executive Condominium flats are inaccessible to private property owners until after 30 months from the date of a property sale. Until the expiration of a 30-day window from the date of sale, previous private property owners are also disqualified from accessing Central Provident Fund (CPF) Housing Grants and a Housing Development Board (HDB) housing loan.
Can I own more than one property in Singapore?
It is not illegal to own more than one property in Singapore. Having more than one property attracts an extra charge in the form of the Additional Buyers Stamp Duty (ABSD). This extra charge increases progressively with subsequent property purchases: first-time property purchases attract a 0% charge while 17% and 25% charges apply to purchases of second and subsequent properties, respectively. For individuals with permanent residence status in Singapore, a 25% and 30% charge applies to second and subsequent property purchases and a 5% charge on the initial purchase. Non-Singaporeans pay a 30% charge for property purchases irrespective of the nature of the purchase. Apart from the ABSD charge, there is also a Buyer’s Stamp Duty (BSD) charge for property acquisitions in Singapore. The Inland Revenue Authority of Singapore receives these stamp duty charges.